A plan for cheaper, better care

Americans could save $1.5 trillion in health care costs over the next decade while covering the uninsured and improving overall quality, according to a report to be released today. But it would take widespread reforms to root out inefficiency, not to mention higher tobacco taxes and other levies.

"We are not getting good value for our dollar," said Karen Davis, president of the Commonwealth Fund, a New York-based research group that prepared the report. "Will we continue to head down a path of less access to care [and] higher costs ... or will we start now to make the changes needed to transform our healthcare system?"

Intended to provide a menu of options for the next president, the report blends ideas put forward by leading political candidates with other proposals. Many of the ideas are likely to stir controversy.

For example, the report calls for boosting the federal tobacco tax by $2 from the current 39 cents a pack. It also proposes a penny tax on 12-ounce, sugar-sweetened soft drinks to fund a campaign against obesity. And it proposes a 1 percent levy on insurance premiums to finance rapid computerization of records kept by doctors and hospitals.

Radically reducing the paperwork that now clogs the health care system could save $88 billion over 10 years, according to the report. Other efficiencies - such as paying doctors and hospitals based on quality of care and results, not just the volume of tests and procedures - are predicted to save even more.

So could rigorous evaluation of the costs and benefits of treatment strategies.

Such a combination of different approaches, there are a total of 15 major proposals in the report, could work together to produce hundreds of billions in savings, the authors said.

Preventive steps such as raising the price of cigarettes would deter teenagers from smoking and reduce their chances of later developing cancer, which is expensive to treat. Meanwhile, a streamlined healthcare delivery system could produce better care for the sick while keeping costs in check.

The savings claimed in the report were estimated by the Lewin Group, a respected healthcare consulting firm that advises businesses and government.

"Everybody believes there are a lot of inefficiencies in the system and there are all sorts of opportunities to save money," health economist Jack Rodgers of the PricewaterhouseCoopers consulting firm said. But the kinds of savings envisioned in the report are difficult to achieve, he added, because the policy changes can create huge winners and losers.

For example, the uninsured would win by securing coverage. But some hospitals and medical providers could see their revenues squeezed in a leaner system.

To cover the uninsured, the report proposes a mix of Democratic and Republican policy ideas. It called for making health insurance a requirement, as have Democratic presidential candidates Sen. Hillary Rodham Clinton of New York and former North Carolina Sen. John Edwards.

But it also says small businesses and individuals should be able to purchase coverage through a national insurance market, instead of being restricted to the state level. Variations on that idea have been proposed by GOP candidates.